One of your friends says "If corn farmers know that the demand for corn is inelastic (in short-run), and they want to increase their total revenue, they should all reduce the number of acres they plant corn." Do you agree with your friend's statement?

Question

Social Studies

Griffen

15 March, 21:14

One of your friends says "If corn farmers know that the demand for corn is inelastic (in short-run), and they want to increase their total revenue, they should all reduce the number of acres they plant corn." Do you agree with your friend's statement?

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Answers (1)

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Carley Ramsey · Answer 1

Answer: Yes I agree

Explanation: when the farmers reduce the number of acres planted, the yield or output of corn reduces and the price of the available corn yield increase as supply is less than demand.

A commodity is inelastic when the change in demand hardly has any correponding change in price. In order to increase revenue, a change in supply; in this case less supply leads to a significant change in price.

This will increase total revenue because a large increase in price will be accompanied by only a small reduction in the quantity demanded if demand is inelastic.